Muskoka Recovery put under interim receivership amid lawsuits, shareholder deadlock and BMO default

Muskoka Recovery Inc. and affiliated property owner 2855531 Ontario Inc. were placed into interim receivership on July 31, 2026 on application by Bank of Montreal, owed about $5.5 million, pending determination of a broader application brought by shareholder Corradina Canonaco or further court order.

Muskoka Recovery formerly operated an addiction rehabilitation business from a property owned by 2855531 Ontario in Muskoka. The holding company owns four properties in the region, while Canonaco and Ewa Maria Ricci each hold 50% of both companies. Canonaco invested as a silent partner and pledged personally owned real estate to support financing for the business, while Ricci and Canonaco’s husband, Ralph Canonaco, managed its operations. According to the application, 285 acquired its principal operating property at 1035 Breezy Point Road for $2.6 million in August 2021, followed by two additional properties that year and a fourth property in Gravenhurst for $760,000 in June 2023.

The companies later obtained a $5.5 million credit facility from BMO in August 2024, with 285 as borrower and Canonaco, Muskoka Recovery and Ricci as guarantors. After the Toronto Star published a two-part investigation concerning Muskoka Recovery in December 2024, BMO amended the facility to require quarterly reporting and compliance with specified performance metrics. The Court said Muskoka Recovery subsequently failed to satisfy those metrics and stopped operating in late 2025. BMO called the facility on April 30, 2026, making formal demand and serving a notice of intention to enforce security.

Financial pressure was accompanied by what the Court found was a complete failure of corporate governance. Canonaco alleged that she had been denied financial information, excluded from major decisions and removed as a Muskoka Recovery director without proper notice or authority. She also raised concerns about related-party transactions and unexplained expenditures, including approximately $150,000 spent allegedly renovating part of a property owned by Ricci’s nephew. The Court found a strong prima facie case both of shareholder deadlock and of oppressive or unfairly prejudicial conduct, noting that the two equal owners were no longer capable of jointly managing property, investigating financial issues or retaining counsel for the companies.

The companies were also carrying property tax arrears and facing about nine lawsuits arising from Muskoka Recovery’s former operations. Those proceedings include a proposed class action commenced in March 2025 seeking $25 million in general damages and $15 million in punitive damages, as well as separate wrongful death and sexual abuse proceedings. The allegations in those cases have not been adjudicated. The companies had no legal counsel at the time of the receivership hearing, and their insurer had issued a reservation of rights without yet determining whether certain claims would be covered.

Albert Gelman is the interim receiver. Counsel includes Chaitons for BMO, Miller Thomson for the interim receiver, Sotos for Canonaco and TGF for certain class action plaintiffs.